Statutory compliance
This query is : Resolved
14 December 2009
Can the share application money be received in form of kind? Do the following entry is correct?
ADVANCE TO CREDITORS a/c Dr
to SHARE APPLICATION MONEY a/c.
ADVANCE TO CREDITORS a/c Dr
to SHARE APPLICATION MONEY a/c.
14 December 2009
Share application money can be received in cash.
But in case of IPO/Right Issue etc., now-a-days; these are received by account payee cheque or demand draft only.
The entry will be:-
Cash or Bank a/c Dr
To Share Application A/c
But in case of IPO/Right Issue etc., now-a-days; these are received by account payee cheque or demand draft only.
The entry will be:-
Cash or Bank a/c Dr
To Share Application A/c
19 December 2009
Can the share application money be received in form of kind? Do the following entry is correct?
ADVANCE TO CREDITORS a/c Dr
to SHARE APPLICATION MONEY a/c.
ADVANCE TO CREDITORS a/c Dr
to SHARE APPLICATION MONEY a/c.
25 July 2025
Regarding your question on **receiving share application money in form of kind** and the journal entry:
---
### Can share application money be received in form of kind?
* **No, share application money is normally received in cash or cash equivalent** (cheque, demand draft, electronic transfer).
* The Companies Act and SEBI guidelines specify share application money should be received in **cash or by bank transfer**.
* **Receiving shares against non-cash consideration (like assets or kind) is considered as a subscription by way of allotment and treated differently** under the Companies Act.
* For allotment against assets or kind, there are separate procedures involving **valuation reports, board approvals, and disclosures**.
---
### Is the entry correct?
> Advance to Creditors a/c Dr
> To Share Application Money a/c
**No, this is incorrect.**
* Share Application Money is a liability or equity-related account representing money received from applicants for shares.
* **Advance to Creditors** is an asset account representing money paid in advance to suppliers.
* If you receive share application money, the correct entry is:
```plaintext
Bank or Cash A/c Dr
To Share Application Money A/c
```
---
### Summary:
* Share application money **cannot** be accepted as goods or kind directly.
* If shares are issued for non-cash consideration, it is handled as **allotment against consideration other than cash**, with proper valuation.
* The journal entry you proposed is **not correct**.
---
If you want, I can guide you on how to account for shares issued against non-cash consideration (like assets). Would you like that?
---
### Can share application money be received in form of kind?
* **No, share application money is normally received in cash or cash equivalent** (cheque, demand draft, electronic transfer).
* The Companies Act and SEBI guidelines specify share application money should be received in **cash or by bank transfer**.
* **Receiving shares against non-cash consideration (like assets or kind) is considered as a subscription by way of allotment and treated differently** under the Companies Act.
* For allotment against assets or kind, there are separate procedures involving **valuation reports, board approvals, and disclosures**.
---
### Is the entry correct?
> Advance to Creditors a/c Dr
> To Share Application Money a/c
**No, this is incorrect.**
* Share Application Money is a liability or equity-related account representing money received from applicants for shares.
* **Advance to Creditors** is an asset account representing money paid in advance to suppliers.
* If you receive share application money, the correct entry is:
```plaintext
Bank or Cash A/c Dr
To Share Application Money A/c
```
---
### Summary:
* Share application money **cannot** be accepted as goods or kind directly.
* If shares are issued for non-cash consideration, it is handled as **allotment against consideration other than cash**, with proper valuation.
* The journal entry you proposed is **not correct**.
---
If you want, I can guide you on how to account for shares issued against non-cash consideration (like assets). Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- TDS on Consultancy- Non DTAA
- Reopen of assessment proceeding
- Depreciation of fixed assets- coop housing society in mumbai
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Condonation . E-Verification of last year return .
- Rental income gst and it purpose
- Eway bill generation from place other than registeted
- GST rate and HSN code for sale of racing horses
- Query – TDS on purchase of land from NRI under Income-tax Act, 2025
- EPF FULL & FINAL RULES IN 2026
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
